Why did reported EPS decline more sharply than comparable EPS?

Reported diluted EPS was $2.90, down 39%, while comparable EPS was $3.22, down 10%. The filing's comparable adjustments include a $96.1 million operating income adjustment in the quarter, including $52.1 million of assets held for sale impairment and related expenses and $13.3 million for the 2025 Restructuring Initiative, which are excluded from comparable results.

Did the company change its fiscal 2026 guidance?

The reported EPS outlook was updated to $12.07 to $12.37. The comparable EPS outlook of $12.60 to $12.90 was maintained, as were the operating cash flow target of $2.7 to $2.8 billion and the free cash flow projection of $1.5 to $1.6 billion.

What drove the decline in Wine and Spirits results?

Wine and Spirits net sales fell 28%, driven by a 30.4% decrease in shipment volumes, reflecting the SVEDKA Divestiture and shipment cadence aligned with weaker consumer demand in mainstream U.S. wholesale price segments. Operating margin fell to (2.1%) from 15.3%, as lower contractual distributor payments and other volume-related variances offset marketing and SG&A efficiencies.

How is the Beer business performing?

Beer net sales declined 2% to $2,234.5 million, with shipments down 3.3% and depletions down 2.6%. Operating margin decreased 150 basis points to 39.1%, due to higher COGS including aluminum tariffs, marketing investments, other SG&A, and lower fixed cost absorption. The company continues to expect Beer net sales growth of 0 to 3% for fiscal 2026.

STZ 8-K: Earnings & Results & Regulation FD

01—Abstract

Summary

Summary of the 8-K filed July 1, 2025. Cited figures are marked; the original filing is the authoritative source.

On July 1, 2025, Constellation Brands, Inc. (STZ) reported first-quarter fiscal 2026 results for the quarter ended May 31, 2025, with net sales of $2,515.0 million^a, down 6% from $2,661.8 million, and reported operating income of $713.8 million, down 24%.

Reported diluted EPS was $2.90^b, down 39%, while comparable EPS was $3.22, down 10%. Beer net sales declined 2% to $2,234.5 million on a 3.3% decline in shipments, with operating margin falling to 39.1%. Wine and Spirits net sales fell 28% to $280.5 million, with an operating loss of $6.0 million, reflecting the SVEDKA divestiture and weaker mainstream wine demand.

The company stated that the wine divestiture transaction closed on June 2, 2025. The company updated its fiscal 2026 reported EPS outlook to $12.07 to $12.37^c, while maintaining its comparable EPS outlook of $12.60 to $12.90, operating cash flow target of $2.7 to $2.8 billion, and free cash flow projection of $1.5 to $1.6 billion. Operating cash flow for the quarter was $637.2 million, and free cash flow was $444.4 million, up from $315.2 million a year earlier.

The company repurchased $381 million^d of shares through June 2025 and declared a quarterly dividend of $1.02 per Class A share, payable August 14, 2025. The filing also announces leadership changes in investor relations, with Blair Veenema assuming leadership effective July 3, 2025, and Joseph Suarez named Senior Vice President, Finance, Wine and Spirits.

02—Key points

Key Highlights

Net sales fell 6% to $2,515.0 million; comparable operating income was $809.9 million, down 11%, and comparable EPS was $3.22, down 10%.
Beer net sales declined 2% to $2,234.5 million, with Beer depletions down 2.6%; the company reported it was the #1 dollar share gainer among U.S. beer brands in Circana channels.
Wine and Spirits net sales fell 28% to $280.5 million, and the segment swung to an operating loss of $6.0 million from operating income of $59.7 million a year earlier.
Reported fiscal 2026 EPS outlook was updated to $12.07 to $12.37, while comparable EPS guidance of $12.60 to $12.90 was maintained.
Operating cash flow was $637.2 million, and free cash flow was $444.4 million, up from $315.2 million, driven by timing of brewery capacity investments.
The company repurchased $381 million of shares through June 2025 and declared a quarterly dividend of $1.02 per Class A share.
Blair Veenema will assume leadership of investor relations effective July 3, 2025.

03—Questions

Frequently Asked Questions

Why did reported EPS decline more sharply than comparable EPS?
Reported diluted EPS was $2.90, down 39%, while comparable EPS was $3.22, down 10%. The filing's comparable adjustments include a $96.1 million operating income adjustment in the quarter, including $52.1 million of assets held for sale impairment and related expenses and $13.3 million for the 2025 Restructuring Initiative, which are excluded from comparable results.
Did the company change its fiscal 2026 guidance?
The reported EPS outlook was updated to $12.07 to $12.37. The comparable EPS outlook of $12.60 to $12.90 was maintained, as were the operating cash flow target of $2.7 to $2.8 billion and the free cash flow projection of $1.5 to $1.6 billion.
What drove the decline in Wine and Spirits results?
Wine and Spirits net sales fell 28%, driven by a 30.4% decrease in shipment volumes, reflecting the SVEDKA Divestiture and shipment cadence aligned with weaker consumer demand in mainstream U.S. wholesale price segments. Operating margin fell to (2.1%) from 15.3%, as lower contractual distributor payments and other volume-related variances offset marketing and SG&A efficiencies.
How is the Beer business performing?
Beer net sales declined 2% to $2,234.5 million, with shipments down 3.3% and depletions down 2.6%. Operating margin decreased 150 basis points to 39.1%, due to higher COGS including aluminum tariffs, marketing investments, other SG&A, and lower fixed cost absorption. The company continues to expect Beer net sales growth of 0 to 3% for fiscal 2026.

04—Continue

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